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Today's edition of the Saxo Morning Call features the SaxoStrats team discussing the continuing weakness of the US dollar as commodity prices recover ground and in the wake of key US equity indices hitting all-time highs Thursday.

The S&P/ASX 200 lost ground in early trading, giving up some of Tuesday's gains. The index was down 0.06% to 5,753.80 at 1039 AEST (0039 GMT).

Asian equities were set for a mixed start to Wednesday after an uninspiring US session that saw the dollar grind higher, with attention turning away from geopolitics and back to economic data.

Markets are settling down after a tumultuous few days spurred by heightened tensions between the US and North Korea. The latest data showed American consumers splurged in July, dragging Treasuries lower and buoying the greenback. The CBOE Volatility Index, known as the VIX, continued to fall amid a return to calm in the stock market, while the S&P 500 nudging slightly lower.

Retailers pressured US stocks Tuesday, as a wave of quarterly reports disappointed investors.

Dick’s Sporting Goods, Coach and Advance Auto Parts were among the companies that fell short of expectations and contributed to declines in consumer-discretionary shares. The S&P 500 fell 1.23 points, or less than 0.1%, to 2464.61—a day after it posted its biggest gain since April.

The Dow Jones Industrial Average rose 5.28 points, or less than 0.1%, to 21,998.99. The Nasdaq Composite declined 7.22 points, or 0.1%, to 6333.01.

Synchrony Financial rose $1.35, or 4.6%, to $30.99, making it one of the S&P 500’s biggest gainers, after Warren Buffett’s Berkshire Hathaway disclosed Monday that it had opened a large investment in the U.S. store credit-card issuer. The financials sector of the S&P 500 rose 0.2%.

Retailers’ earnings were mixed. Dick’s Sporting Goods fell $8.04, or 23%, to $26.87—its biggest decline on record—after same-store sales fell short of expectations in the latest quarter and the company lowered its forecast for annual earnings. Advance Auto Parts shares also posted their biggest one-day percentage decline on record, shedding $22.24, or 20%, to $87.08, after the company lowered its 2017 guidance and missed analysts’ estimates on profits. Coach, whose profits beat expectations but sales fell short, shed $7.28, or 15%, to $40.64.

Home Depot said it grew same-store sales and raised its outlook for the second time this year. Shares fell $4.09, or 2.7%, to $150.17.

Shares of many brick-and-mortar retailers have tumbled this year as increased competition from e-commerce giants like Amazon.com have cut into profits.

The Commerce Department said Tuesday that sales at retailers and restaurants rose 0.6% from a month earlier, the biggest jump since December, attributing much of the increase to internet sales.

Stock markets around the world were relatively calm Tuesday after swinging last week following some weak earnings and geopolitical tensions. The Stoxx Europe 600 rose less than 0.1%, while Japan’s Nikkei Stock Average added 1.1%.

Gold fell for a second day on Tuesday as North Korean leader Kim Jong Un signalled he would delay a decision on firing missiles towards Guam, encouraging investors to buy riskier assets and boosting stocks, the dollar and bond yields. The shift to riskier assets is doubly negative for gold because a stronger dollar makes dollar-priced gold costlier for holders of other currencies, while higher bond yields raise the opportunity cost of holding non-yielding bullion. Spot gold was down 0.75% at $1,272.30/oz. US gold futures for December delivery were settled down at $1,279.70/oz.

Also weighing on gold prices was the prospect of another increase in U.S. interest rates, with an influential Federal Reserve official saying on Monday he would support one more rise this year. Gold is highly sensitive to rising interest rates because they push bond yields higher and tend to strengthen the dollar. Data on Friday showed hedge funds and money managers increased their net long position in COMEX gold for the fourth straight week to a near two-month high in the week to Aug. 8. Gold stocks in Toronto edged lower again overnight dropping 0.39% on Friday. Gold stocks: GOR, NCM, NST, AQG, EVN, KCN, RMS, RRL, SAR, SLR

Oil prices edged lower on Tuesday, weighed down by concerns over demand and a strengthening US dollar. Light, sweet crude for September delivery settled down 4 cents, or 0.1%, at $47.55 a barrel on the New York Mercantile Exchange, paring losses after trading as low as $47.02/b. Brent, the global benchmark, rose 7 cents, or 0.1%, to $50.80/barrel. Prices fell for the second day in a row after Chinese refiners cut back on crude processed and a strong dollar weighed on commodities prices. The summer rally that took prices up to $50/b has lost steam, even as the amount of oil in U.S. storage has continued to decline. In part, prices have stalled because investors are worried about whether there will be enough demand to soak up excess oil, especially as U.S. shale producers have increased activity and members of the global oil cartel show signs of slipping compliance with production cuts agreed on last year.

Recently, Chinese data showed a drop in July consumption as refiners processed less crude into products. Opec, along with other major oil-producing nations, agreed to limit output late last year in an attempt to cut down on oversupply. But July data showing a rise in Opec production has helped undermine faith in the cartel’s ability to rebalance the global oil market. Traders are also waiting to see whether Saudi Arabia’s plans to cut exports will help ease the global supply glut. Oil stocks: WOR, WPL, STO, SEA, BPT, OSH, HZN, AWE, KAR, ORG, SXY

Spot iron ore prices fell further as weakness in the futures markets in China spread. Spot iron ore dropped 1.4% or $1.03 to close at $73.68. With the higher trading charges and a cap on daily positions kicking in on the Shanghai Futures Exchange, investor appetite has been dented. This is despite recent economic data showing a relatively robust level of demand in China. Iron ore stockpiles at Chinese ports fell 2.6mt to 126.4mt, according to Antaike Information Development. Iron ore stocks: FMG, BHP, GBG, GRR, MGX, RIO, BCI, SDL

Benchmark lead prices were the biggest gainers on the London Metal Exchange, closing 1.9% higher at $2,380 a tonne. LME nickel fell 1% to end the day at $US10,350, after inventories stored in LME-certified warehouses increased by 8970 tonnes to 384,258 tonnes. Three-month LME copper dipped 0.3% to finish at $6,379. Prices hit their highest in more than 2-1/2 years on August 9 at $6,515. Copper stocks: OZL, SFR;

Zinc climbed 1.5% to end at $US2960. LME aluminium gained 1.3% to close at $,2049 after touching $US2056, the highest since November 27, 2014. Aluminum has extended gains to the highest in almost three years amid signs of declining supply as China cuts capacity. Tin, untraded during closing rings, was bid down 1% at $US20,100. Nickel stocks: IGO, WSA; Aluminium stock: AWC

Commonwealth Bank (CBA): Is said to have met with Zurich, others on life unit: AFR; Trading ex-div.

In early reporting: Woodside Petroleum confirmed that their H1 profit rose 49% on higher crude prices. Average realised price +10% to $43/boe. Revenue $1.76bn v $1.94bn last year due to lower LNG production. Continues to target selection of Browse development concept in H2, 2017 and start of engineering and design in 2019. Started talks with contractors on Pluto about expansion studies for small to mid-scale LNG trains. Investigating a transfer pipeline connecting Pluto LNG and Karratha Gas Plant. Final commissioning of Wheatstone LNG is nearing completion.

Westfield released H1 Net Profit of $588.9mln and reaffirmed full - year guidance. The $15.7 billion global shopping centre giant Westfield Corporation has met guidance for the first half and expects full year fund from operations to remain in line with expectations. The retail landlord, run by Steven and Peter Lowy, reported FFO for the six months to June 30 of $343 mln, or 16.5 cents per security, up 4.5% on a constant currency basis. Comparable net operating income growth was 3.5% for the six months which is down from the 3.9% growth achieved in the first 6 months of 2016. First-half net income rose 20% to $589 mln from $491 mln a year ago, while revenue in the six months ended June 30 climbed 18.35 to $987.6 mln from $834.7 million in the year-earlier period.

A heavy write-down on the APLNG gas export project in Queensland has driven Origin Energy to a $2.2 billion net loss, more than three times the loss of a year earlier. The write-down was flagged last week and was driven by a reduction in Origin's assumptions for future crude oil prices. Sales climbed 16 per cent to $14.1 bn. Origin declared no final dividend for 2016-17.

Seven West Media said it swung to a full-year net loss of $744.3 million from $184.3 million a year ago. Revenue in the year ended June fell 2.7% to $1.67 bn. It said its sees fiscal 2018 underlying group EBIT about 5% lower than in the year just ended. It will pay a fully franked final dividend of 2 cents.

Vaccines and blood products supplier CSL said its full-year net profit climbed 7.6% to $1.34 bn ($A1.7 bn). Revenue for the year ended June 30 rose 12% to $6.62 bn. CSL declared an unfranked final dividend of $0.72 a share, up from $0.04 last year. It said it expects fiscal 2018 net profit in constant currency terms to climb to a range of $1.48 bn to $1.55 bn.

Share registry company Computershare said its net profit in constant currency trms rose 2.7% to $311.6 mln from $303.5 mln. Its actual earnings totalled $297.3 mln. Revenue rose 10.6% rise $2.18 bn and it reported a 4.65 rise in EBITDA to $557.2 mln. Chief executive Stuart Irving said the strategy to simplify and refocus the business put the company in a better position to enhance shareholder returns. Computershare's mortgage services business saw a 70.6% increase in revenues to EBITDA of $78mln. The Mortgage services business now accounts for almost one quarter of group revenue. On a constant currency basis, Computershare revealed that it expects FY18 earnings per share to increase by 7.5% on FY17.

Earlier this month, GBPUSD made a reversal at 1.3268 that corresponds to 50% retracement (from the 2016 high of 1.5016 and the 2016 low of 1.1506).

Since then, GBPUSD has been under selling pressure and it extended losses on the back of disappointing CPI and PPI numbers last night, but selling seems to have stopped at the uptrend (from the March 17 low).

We would confirm further downside if we see a break below July low 1.2811.

GBPUSD chart

AUDCAD struggling

AUDCAD is clearly struggling to stay above the key resistance level 1.0040 area that coincides with 50% retracement (from the May high 1.0344 and July low 0.9734).

Futhermore, the 200 day moving average has been restricting advances. So we would look to sell any ralllies above parity.

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